Update No. 218 – 05/06/15

The week just completed was the third worst week for our benchmark ASX200 index since the inception of EGP and the first time the market has declined by more than 4% since May 2012. The only two worse weeks for the benchmark since the fund began were in August & September 2011.

Sue (my Wife) says she can tell when the market is falling sharply when she gets home. Apparently I’m markedly happier at the end of such days. The relative improvement in the results tabled below this week probably tells you why she notices this, our record of outperformance in weeks when the market declines by 2% or more has improved to 25 & 0. We have improved from slightly behind the market last week to our greatest lead over the market in FY2015 of 2.93%.

The 9.15% return year to date is pretty mediocre in terms of what we’ve generated in the last couple of years, but is not too bad with the falling market.

I pointed out in the last quarterly my view that the Australian market was probably trading at above its fair value, but that we were having success putting our capital to work in the few enterprises we could find that were intrinsically inexpensive. The market since then has retreated by over 6% and the fund is up about 3%. Rarely is the market so kind as to make one look correct in such short order.

Our offer to invest (or redeem) letters went out with the dividend statements last week, we are working on a number of very interesting opportunities, so I hope the subscription uptake is strong this quarter. I will talk a little about this in the FY2015 investor letter, but our small size at the moment is probably more of an anchor than a benefit. I am quite sure if we had double the amount of capital under our control that it would help rather than harm our returns at present – Tony Hansen 05/06/2015

EGP Fund No. 1 Pty Ltd. Up by 9.15%, leading the benchmark by 2.93% since July 1^st 2014. Since inception, EGP Fund No. 1 Pty Ltd is Up by 86.05%, leading the benchmark by 48.95% all-time (April 1^st 2011).

^{*1 after a 31 May 2013 dividend of 2.333 cents per share (cps) plus 1.000 cps Franking Credit, a 31 May 2014 Dividend of 7.000 cps plus 3.000 cps Franking Credit and a 31 May 2015 Dividend of 8.6667 cps plus 3.7143 cps Franking Credit}

^{*2 calculated based on dividends reinvested}